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Highlights
The U.S. trade balance in September improved, largely on petroleum. And the best news is that exports rebounded. The trade deficit narrowed to $41.5 billion from $43.8 billion in August (originally $44.2 billion). Analysts forecast a trade shortfall of $45.4 billion. Exports rebounded 3.1 percent, following a 1.0 percent decline in August. Imports increased 1.5 percent after slipping 0.2 percent the month before.
The shrinking in the trade gap was led by the petroleum deficit which decreased to $21.7 billion in September from $23.5 billion in August. The non-petroleum goods shortfall actually grew to $35.2 billion from $34.9 billion for the prior month. The services surplus improved to $15.9 billion from $15.1 billion in August.
On a not seasonally adjusted basis, the September figures showed surpluses, in billions of dollars, with Hong Kong $2.2 ($2.1 for August), Australia $1.9 ($1.8), Singapore $0.7 ($0.9), and Egypt $0.3 ($0.2), among others. Deficits were recorded, in billions of dollars, with China $29.1 ($28.7), European Union $8.6 ($11.7), OPEC $7.1 ($8.1), Germany $5.2 ($5.7), Japan $4.8 ($6.7), Mexico $4.8 ($4.5), Canada $1.9 ($2.2), among others.
Perhaps exports hit a low in August, given the widespread rebound in September. Gains were seen in all major categories except for automotive. And that category probably reflected monthly volatility between U.S. and Canadian trade which is common in the auto industry.
On the import side, nearly all categories were up with consumer goods especially strong. Perhaps, businesses are not as negative about consumer demand as suggested in earlier trade reports.
Broadly, today's trade report is good news as exports are up and businesses are bringing in imported consumer goods for apparently expected higher demand.
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Market Consensus before announcement
The U.S. international trade gap in August worsened and partially for the worst reason-exports declined, likely reflecting economic weakness in Europe and slower growth in Asia. Also, oil and petroleum product imports jumped on higher prices. The trade deficit expanded to $44.2 billion from $42.5 billion in July. Exports fell 1.0 percent, following a 1.1 percent decrease in July. Imports slipped 0.1 percent after a 0.6 percent dip the prior month. The latest report continues to suggest that global trade is shrinking somewhat. This suggests soft economic growth ahead for the U.S. and other countries.
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